The Texas Workers' Compensation Commission (the commission) adopts new §§133.305, 133.307, and 133.308 and the simultaneous repeal of existing §133.305, (concerning Medical Dispute Resolution) with changes to the proposed text published in the November 2, 2001 issue of the Texas Register (26 TexReg 8710). The new rules and repeal are adopted to comply with statutory revisions regarding medical dispute resolution in the workers' compensation system.

As required by the Government Code §2001.033(1), the commission's reasoned justification for this rule is set out in this order, which includes the preamble, which in turn includes the rule. This preamble contains a summary of the factual basis of the rule, a summary of comments received from interested parties, names of those groups and associations who commented and whether they were for or against adoption of the rule, and the reasons why the commission disagrees with some of the comments and proposals.

House Bill 2600 (HB-2600), adopted during the 2001 Texas Legislative Session, amended §413.031 of the Texas Labor Code concerning medical dispute resolution. With respect to medical dispute resolution, HB-2600 addresses the following:

* the items for which medical dispute resolution is available;

* an injured employee's right to request review of a medical service for which preauthorization is sought by the health care provider and denied by the insurance carrier;

* disputes over the amount of payment due for services determined to be medically necessary and appropriate for treatment of a compensable injury;

* review of the medical necessity of a health care service requiring preauthorization under §413.014 of the Texas Labor Code;

* review of the medical necessity of a health care service provided under Chapter 408 or Chapter 413 of the Texas Labor Code;

* the dispute resolution process for a dispute in which the injured employee has paid for health care and been denied reimbursement by the carrier;

* billing for commission or independent review organization (IRO) review; and

* the appeal of a commission decision or an IRO decision.

The issues for which medical dispute resolution is available include disputes as to fees and disputes regarding medical necessity of health care. Some of the medical necessity reviews are prospective (prior to providing the health care), and some are retrospective (after the health care has been provided). The statute establishes the manner in which the reviews are to be conducted. Fee disputes will continue to be resolved by the commission, as they currently are. Prospective and retrospective medical necessity reviews shall be conducted by an IRO under Article 21.58C, Texas Administrative Code, in the same manner as reviews of utilization review decisions by health maintenance organizations. The statute also establishes the party that pays for commission review or the independent review; the identity of the party depends on the circumstances of the review and the decision reached by the commission or the IRO.

Changes made to the proposed rule are in response to public comment received in writing and at a public hearing held on November 14, 2001, and are described in the summary of comments and responses section of this preamble. Other changes were made for consistency or clarification, or to correct typographical or grammatical errors. Changes were made to the rules to correct spelling and punctuation errors, grammar and syntax. References to the "commission" and to the "division" in the rules as proposed were revised to reflect the appropriate entity.

The major revisions to the proposed rules were incorporated as a result of public comment and stakeholder input. Changes are designed to streamline medical dispute resolution into a single line dispute process to the extent possible, in which there are two types of disputes: medical fee and medical necessity. Under the adopted rules, the requestor simultaneously submits all initial requests for dispute resolution to the carrier or respondent with a copy to the commission for monitoring of carrier compliance. At that point, the carrier is held responsible for timely supplying additional information to the initial request and providing it to the requestor with a copy to the commission.

The division reviews the documents and determines if the dispute is: 1) medical fee only and will be addressed and resolved by the commission; 2) prospective medical necessity care and will proceed to independent review by an Independent Review Organization (IRO); 3) retrospective medical necessity with a medical fee component and will proceed to independent review at an IRO to resolve the medical necessity question, then if medical necessity has been established, the division will resolve the fee dispute and issue a single order to include the IRO decision; 4) an injured employee reimbursement dispute, and will determine which dispute process is appropriate for resolving the issues; 5) a carrier refund request and will determine which dispute process is appropriate for resolving the issues; 6) a commission refund order dispute and will advise the parties to pursue resolution at the State Office of Administrative Hearings (SOAH).

Also based upon public comment discussed below, the commission has revised the billing process. For retrospective reviews, the requestor must pay the IRO fee to the IRO before the IRO begins review of the case. The time frame in which the IRO must render a decision does not begin to run until the IRO receives the fee payment from the requestor. If the requestor is the prevailing party in the IRO decision, the commission will order the respondent to reimburse the IRO fee to the requestor within 10 days. If the respondent is the prevailing party in the IRO decision, there is no need to order any party to reimburse the other party. In an employee reimbursement dispute and in a preauthorization prospective necessity dispute, the carrier must pay the IRO fee to the IRO before the IRO begins review of the case. Upon receipt of an IRO assignment in a prospective dispute or an employee reimbursement dispute, the carrier shall remit payment to the assigned IRO at the same time the carrier files the documentation requested by the IRO.

Commenters raised concerns that there would not be sufficient IRO capacity to handle the workers' compensation case volume as of January 2002. Commenters recommended that the commission provide interim procedures and provisions to accommodate and reduce the system-wide cost of the potential delays and backlogs while phasing in the IRO process and emphasize those disputes for which time is an element. Others recommended that the commission consider engaging independent, objective reviewers who are not affiliated with the commission, carriers or related third parties to conduct those reviews not able to be completed by IROs due to capacity limitations. The commission understands the concerns, but the legislature has mandated the review process for medical disputes and use of any alternate process will have to be by mutual agreement of the parties. The commission has taken steps in these rules, however, to attempt to reduce the burden on IROs, including changes in the billing process and in the determination of the nonprevailing party, while still complying with statutory intent. In the rules as adopted, the commission has prioritized the dispute types that will be forwarded to the IROs in the event that IRO capacity is exceeded. In addition, the rule as adopted allows the commission to assign disputes in accordance with the priorities established in the rule and in a manner other than a rotating basis if necessary because of insufficient IRO capacity. The commission encourages all parties to explore all options in resolving their medical disputes prior to requesting medical dispute resolution. The commission will, by TWCC advisory, provide information regarding an alternate process to which the parties may voluntarily use to resolve disputes in the event of insufficient IRO capacity.

Proposed §133.305 Medical Dispute Resolution - General

Previous §133.305 addressed medical dispute resolution pursuant to the statute in effect prior to the effective date of HB-2600. Because of the substantial statutory revisions, the commission has repealed former §133.305 and adopted a new §133.305. In addition, because the manner of review differs dependent on the type of dispute, the commission has separated the medical dispute resolution provisions into three rules. The rule as adopted is titled "Medical Dispute Resolution - General." This adopted title more accurately describes the content of the section, as the adopted rule includes not only an expanded subsection of definitions, but supplementary information regarding the overall process concept, as well.

Section 133.305 Subsection (a) includes seven (7) definitions to provide clarification and facilitate an understanding of the various types of disputes and terminology incorporated into general usage in these rules. A definition of "initial request" was added based on public comments and other revisions to the rule that were also based on public comment. An initial request is initiated by the requestor for all types of disputes and the carrier or respondent is required to complete any missing information or documentation, including explanation of benefit documentation or prospective care denials. This information is vital to the division in order to establish a complete request for medical dispute resolution. Minor edits were made to the definition of respondent to clarify the purpose of the respondent and the issues the respondent is limited to in responding to a request for medical dispute resolution.

Proposed §133.305(b) stated the requirement to file two separate dispute requests if the health care in dispute had fee issues and medical necessity issues. In response to public comments critical of a "bifurcation" of the medical dispute process, subsection (b) was revised to allow for a single filing regardless of the type of medical dispute, and a single notice of decision to the parties. A request for medical dispute resolution must be filed with the commission and the carrier or respondent in the form, format and manner prescribed by the commission. The same form will be used for medical fee disputes, medical necessity disputes, and combined fee and necessity disputes. The carrier shall complete the remaining sections of the request form, provide any missing information or documentation required on the form, and file the form with the Medical Review Division (division) of the commission within three working days of the carrier's receipt of the initial request. If the request is for medical fee dispute only (i.e., it does not include a medical necessity dispute), the commission will notify the parties and require the requestor to send additional documentation relevant to the fee dispute to the division within 14 days. If the request is for a medical necessity dispute only, or if a request includes fee and necessity disputes, the commission will assign an IRO and the IRO and the commission will notify the parties.

The commission will review the request for IRO review, assign an IRO, and notify the parties and the IRO of the assignment. The commission will assign disputes on a rotating basis to the IROs certified by TDI, in accord with Insurance Code article 21.58C and TDI rules. The rule as adopted, however, allows the commission to assign disputes in accordance with the priorities established in the rule and in a manner other than a rotating basis if necessary because of insufficient IRO capacity. The IRO shall also notify the parties of the assignment, and require the parties to submit documentation directly to the assigned IRO. Documentation is to be received not later than the seventh day after the party's receipt of the IRO notice. The rule as proposed prohibited an IRO or a provider from requiring the written consent of the injured employee as a prerequisite to obtaining medical records relevant to the review. The adopted rule states that no IRO or provider is required to obtain a written consent from the employee. The IRO shall preserve confidentiality of individual medical records as required by law.

The IRO shall review and render a decision. If the dispute is a preauthorization dispute, the IRO shall send the IRO decision directly to the parties and the division. If the dispute is a retrospective review, the IRO shall send its decision to the division. The division will review the original dispute request and determine who the nonprevailing party is for purposes of paying the IRO fee. If there is no pending medical fee dispute for the services determined to be medically necessary by the IRO, the division will send the IRO decision to the parties. If there is a pending medical fee dispute for a service determined to be medically necessary, the division will send the parties an order stating which party is the nonprevailing party, and ordering any payment or reimbursement of the IRO fee as necessary, and also ordering the parties to send to the division within 14 days, documentation relevant to the fee dispute. The division will then process the medical fee dispute and send to the parties both the IRO medical necessity decision and the medical fee decision of the division.

Proposed §133.307 Medical Dispute Resolution of a Medical Fee Dispute

Section 133.307 amends the title to "Medical Dispute Resolution of a Medical Fee Dispute," which more closely reflects the content of the new rule. Subsection (a) states that the rule applies to a request for resolution of a medical fee dispute for which the initial dispute resolution request was filed on or after January 1, 2002. This complies with the HB-2600 provisions regarding the effective date of the statutory changes to Texas Labor Code §413.031. Dispute resolution requests filed prior to that date will be resolved in accordance with the rules in effect at the time the request was filed. The reference to the previously proposed separate filing of different types of disputes has been deleted. In compliance with §413.031(c) regarding disputes over the amount of payment due, the role of the commission is to adjudicate the payment given the relevant statutory provisions and commission rules. Medical necessity is not an issue in a medical fee dispute.

Subsection (b) states who may be a party to the different types of fee disputes without changes from proposal.

Subsections (c)-(e) set out the required content of an initial request and the time frames in which the various types of fee dispute requests must be filed. Subsection (c) provides explanation that the initial request for medical dispute resolution be filed timely and simultaneously with the carrier or respondent and with the commission. The carrier is required to review and screen the initial request in order to establish the dispute issues that determine the appropriate method for dispute resolution per the rules. The structure is streamlined so that a copy of all requests for medical dispute resolution is simultaneously filed with the commission and the carrier or respondent.

Subsection (d) incorporates changes to timeliness issues for jurisdiction of review and monitoring of carrier compliance with providing complete and accurate information to the initial request in the format of the TWCC-60a, The Request for Medical Dispute Resolution. The previous rule restricted medical dispute resolution to 1 year after the date of service. The new rule as proposed tied the deadline to the date of the carrier's denial action and the clock would not start until the carrier issued its final response to the request for reconsideration. Based upon public comment and stakeholder input, the rule as adopted retains the one-year from date of service deadline. The proposed deadlines created a window within which the request for dispute resolution must be filed. This constraint could cause some difficulties with health care providers' billing cycles, and would increase the resources required by the commission, the health care provider, and the carrier to track the beginning and end dates of this constraint. However, the date of service is contained in numerous documents and the one-year deadline is an easily determined date. For disputes regarding carrier denials or reduction of payment, employee reimbursement, and provider denial or reduction of carrier request for refund of payment, the adopted rule reincorporates the one (1) year rule to limit the review of dispute date(s) of service.

The heading of subsection (e) has been changed from Complete Request to: Initial Request (General). The new adopted language includes the same requirements for legibility and simplicity in submission of a single copy of each document, and specific requirements to be included in the request. The submission of the initial request was greatly simplified by requiring only copies of the medical bills in dispute as originally submitted to the carrier, and a copy of each EOB or response to the refund request relevant to fee disputes, or if no EOB was received, convincing evidence of carrier receipt of the provider's request for an EOB from the carrier. Simplification of the request was also effected by the deletion of the requirement to submit supporting documentation of the request for and response to reconsideration of a denial if in the possession of the requestor, a copy of medical records, clinical notes, diagnostic test results, treatment plans and other documents, as well as a statement of the disputed issue(s) including a description of the health care for which payment is in dispute, a statement from the party regarding their position on the dispute issues, and justification for fair and reasonable reimbursement for which a maximum allowable reimbursement (MAR) has not been established. In the rule as adopted, the aforementioned documentation is "additional documentation" to be submitted at the direction of the division once a determination is made regarding the dispute type.

Subsection (e) also establishes the actions required by the carrier or respondent in completing a request for medical dispute resolution. In response to public comment, language in subsection (e) was further amended to establish the respondent's action upon receipt of the initial request, to include: completion of remaining applicable sections of the request form; provision of any required information missing from the form and absent EOBs not included with the initial request; and filing of the completed request with the division and requestor within three (3) working days of receipt of the initial request. Language also developed in response to comment includes instruction for certifying action of the respondent in the event that the provider's disputed billing or employee's reimbursement request relevant to the dispute, had never been received, or if the dispute had already been resolved.